Wall Street Bonus Payments

It would seem that a 70% drop in stock value, combined with 5 quarters in a row of straight losses is not a good enough reason to stop bonus payments of nearly $7 billion, most of which will go to the decision-making end of the company. Bloomberg is reporting that Merrill Lynch & Co have set aside $6.7 billion in taxpayer’s money for bonuses this year. I say “taxpayer’s money,” but it is rather hard to determine where this money is coming from.

Combined with bonuses from other more profitable banks, Bloomberg estimates that around $20 billion in total will be paid out as bonuses in Wall street this year. One can certainly understand the profitable companies making payments of this size, but the loss-makers? Even Lehman Brothers is apparently preparing to make size-able bonus payments.

The real question is - will this be enough to re-start the sluggish NYC luxury property market?

Unlikely is the obvious answer. With share prices still in freefall around the world, and it becoming clear that the problem is deeper rooted than just a case of “lack of confidence,” throwing 20 billion dollars at the top of the banking tree is more likely to push the price of gold up than the price of luxury condos in Manhattan.

Michael Mandel at Business week made an interesting point in an article today, pointing out that the real problem, is not simply loss of confidence, but lack of sound business practices in the first place. I agree with him, something had to give. The current crisis is unpleasant, but the sooner the governments look at the real problem and stop pretending that printing more money is the answer, the sooner we can look at rebuilding the economy in a more sustainable fashion. This may mean a little pain in the short term, but hopefully we can come back stronger in the long run. One of my credos is to try to never make the same mistake twice, and that appears to be what our governments are doing.

• Bloomberg on bonuses
• Michael Mandel at Businessweek
• Lehman Brothers fallout - Golf development in Limbo

Luxury Property is proud to announce the first of many foreign-language blogs

iHaozhhai.cn is the Chinese language version of The Luxury Property Blog. With a Chinese domain name, in-country translation and research, Chinese search engine optimization and a strong program of promotions, Luxury Property Dot Com will soon become a force to be reckoned with in the international luxury real estate market.

For those of you interested in joining our growing team of professional real estate bloggers, this development represents an extremely interesting breakthrough. If you are - as you aught to be - considering the fact that China is becoming a global power house financially, the opportunity to reach a Chinese audience, in Chinese is really too good to be missed.

The Luxury Property Blog offers the opportunity to speak to Chinese buyers in their own language, offering luxury properties for sale to one of the wealthiest group of buyers in the world. According to a study by Merrill Lynch (present mistakes not-withstanding) China boasted 345,000 millionaires in October 2007, up 7.8% from the previous year.

China also has 4,935 Ultra-High Net Worth Individuals, with financial assets in excess of US$ 30 million, along with 106 dollar billionaires.  

We would suggest that to ignore this market and pool of potential luxury real estate buyers would be a mistake, and are fully committed to a presence in the Chinese Luxury Real Estate market, along with plans to enter other foreign markets in the not-too-distant future.

If you are interested in writing a blog on your real estate market with the possibility of having your words translated into Chinese  and published on a Chinese blog, please contact: Mark Knowles

In spite of the doom and gloom surrounding the financial markets these days, luxury property in London seems to be excluded from the damage. I mean – let’s face it, Merrill Lynch and Bear Sterns’ executives  still got their year-end bonuses even if the investors lost their shirts.

A flat in St. James’ square, London this week sold for the record price of (more than) $230 million, twelve milliseconds after planning permission was approved. The flat is to be one of only six in a 1930’s office block. Each floor of the building will be used to create one single flat.

The main reason for the price seems to be the fact that this is an extremely unusual opportunity. The last time a new flat was available in the square, which lies within walking distance of Buckingham Palace was eight years ago.

Apparently, the company has now sold four of the six flats, so interested buyers need to get a move on. The local council was paid off with a payment of nearly $8 million towards affordable housing in the borough. Despite opposition due to the fact that a private bar is planned for the ground floor. What is the world coming to? A bar in St. James’ square. What next – a discothèque?